wmeubank@ocp.kcmo.com
BRADFORD & CO., INC.
330 Commerce Street, Nashville, Tennessee
(November 13, 1997) CORN: The USDA raised their estimate of corn production to 9.359 B.B. compared to 9.312 B.B. in October. Most traders were expecting a lower figure due to the winter storm in the western corn belt a couple of weeks ago. However, this may not show up until the final report in January. The big surprise in the crop report was the lowering of exports 100 M.B. to 1.925 B.B. This was a drastic cut according to USDA standards and resulted in a sharp sell off in the market early this week. The reduction in exports and increase in production resulted in an increase in ending stocks to 928 M.B. versus 781 M.B. last month. Although the report appears negative on the surface, the supply-demand situation will remain tight with little allowance for poor crops in the southern hemisphere. So far, we are off to a less than desirable start in South Africa and South America. Eighty-four percent of the crop has been harvested compared to 75 percent last week and 77 percent for the five-year average. Weather conditions will be wet the rest of the week which means the final phase of harvest will be drawn out. Ohio is only 57 percent complete and field losses from wet conditions can be expected. Export inspections were at the high end of guesses at 24.7 M.B. December corn is still in a corrections from the October high at 295. Last week's comments mentioned that a test of 275.5 was expected with a bottom due November 10, 11 or 13. Prices fell to 273 on the 12th, but a rally above 279.5 is needed to confirm that the correction is over. Until this occurs, the market acts like it will move lower, possibly near 270, with 262 the extreme. Look for the next bottom on the 19th-20th if prices are lower. Longer term, the outlook is higher with the potential for a rally to 320 or 360 basis the March or May contract.
Dewey Strickler
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